As problems in the housing market pushed the two mortgage giants farther and farther into the red, the federal government stepped in, placing the companies in conservatorship in September 2008. The two GSEs, so far, have been given $146 billion to stay afloat, giving taxpayers an 80 percent ownership stake in the mortgage financiers.
Recent estimates from the Congressional Budget Office (CBO) put the tab for subsidizing Fannie and Freddie at $389 billion, when all is said and done. Lawmakers, who've been pushing for the GSEs' dissolution, argue that the figure is even higher Ã¢â‚¬" closer to $500 billion Ã¢â‚¬" while other market observers warn that if home prices continue to drop, the GSE bailout bill could jump to $1 trillion.
By comparison, 707 banks have received a total of $205 billion in bailout dollars. But thanks to a swifter-than-expected return to healthier balance sheets, banks have already repaid $142 billion, leaving just $63 billion outstanding but expected to be returned before long.
The nation's two largest mortgage companies, on the other hand, continue to struggle and are proving to be the costliest ""rescue"" for taxpayers.
A recent article from the _New York Times_ explains how home repossessions in greater numbers have significantly
expanded Fannie and Freddie's role as landlord and are contributing to the escalating price tag of their bailout.
Fannie Mae and Freddie Mac took over a foreclosed home roughly every 90 seconds during the first three months of this year, according to the paper. Together, they owned 163,828 homes at the end of March Ã¢â‚¬" a portfolio _Times_ reporter Binyamin Appelbaum described as a virtual city with more houses than Seattle, making the GSEs two of the nation's largest landlords.
The bill for restoring and reselling just one of these repossessed homes generally costs the government about $10,000, after repairs are made, stolen appliances are replaced, and the inside and outside are returned to marketable condition, Appelbaum explained.
And until the companies find a buyer for the properties, regular maintenance must be performed. Fannie has contractors mow lawns twice a month during the summer, and pays them $80 each time, the _Times_ article says, leaving the GSE with a monthly lawn care bill of more than $10 million.
The two GSEs laid out more than $1 billion for upkeep in 2009 alone, according to the paper.
""We may be behind many loans on the same street, so we believe that it's in everyone's best interest to aggressively do property maintenance,"" Chris Bowden, the Freddie Mac executive in charge of foreclosure sales, told the _Times_.
Because property prices have fallen so far, Appelbaum, citing the two GSEs' financial filings, says by the time a repossessed home is resold, Fannie and Freddie on average recoup less than 60 percent of the money the borrower failed to repay. Losses are even greater in areas where prices have dropped the farthest, such as hard-hit markets in Arizona and Nevada.
As the costs continue to mount, lawmakers' calls for the administration to map out a strategy for weaning Fannie and Freddie off taxpayer support are getting louder.
Treasury Secretary Timothy Geithner has said a proposal for ""fundamental reform"" of Fannie Mae and Freddie Mac will come early next year.